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Dow Inc. (DOW) shares plummeted 11.52% on Thursday after the chemical manufacturer reported a devastating second quarter that saw losses far exceed Wall Street expectations.

The company posted an adjusted loss of 42 cents per share, more than triple the projected 12-cent loss, while revenue fell 7% year-over-year to $10.104 billion, missing estimates by $148 million.

In response to mounting financial pressures, Dow’s board approved a dramatic 50% reduction in its quarterly dividend to 35 cents per share, signaling the severity of challenges facing the chemical giant amid persistent macroeconomic headwinds and global trade disruptions.

Disappointing Quarter Forces Drastic Dividend Cut for DOW
 

Dow’s second-quarter results painted a grim picture across all business segments, with the company posting a GAAP net loss of $801 million compared to operating EBIT swinging to a $21 million loss from $819 million profit in the same period last year.

Sales declined across all operating segments, with Packaging & Specialty Plastics revenue falling 9% to $5.03 billion, Industrial Intermediates & Infrastructure declining 6% to $2.78 billion, and Performance Materials & Coatings dropping 5% to $2.13 billion. The widespread deterioration reflects what CEO Jim Fitterling described as a “lower-for-longer earnings environment” amplified by recent trade and tariff uncertainties.

The company’s decision to slash its quarterly dividend from 70 cents to 35 cents per share represents a significant blow to income-focused investors and underscores the severity of Dow’s financial strain. Operating cash flow from continuing operations turned negative at $470 million, a staggering $1.3 billion decline from the prior year, driven by compressed margins and seasonal working capital needs.

This dramatic cash flow deterioration, combined with overall volume decreases of 1% year-over-year and local prices falling 7% from the same period last year, forced management’s hand in preserving financial flexibility through the dividend reduction.

The earnings miss of 146.25% beyond expectations highlights fundamental challenges in Dow’s core markets, with persistent macroeconomic pressure and what Fitterling characterized as distorted competitive dynamics from low-cost exports from new market entrants.

The company’s struggle is further evidenced by negative levered free cash flow of $583 million and a troubling debt-to-equity ratio of 103.62%, indicating significant balance sheet stress that necessitated the aggressive capital preservation measures including the dividend cut.

DOW Shares Plunge After Disappointing Earnings
 

DOW shares were trading at $26.89 on Thursday at the time of writing, down $3.50 or 11.52% from the previous close of $30.37, with heavy trading volume of 8.367 million shares compared to the average volume of 10.778 million. The stock has been under severe pressure throughout 2025, with year-to-date returns of negative 30.00% significantly underperforming the S&P 500’s positive 8.17% return. The company’s market capitalization has shrunk to approximately $19.021 billion, reflecting investor pessimism about the chemical sector’s near-term prospects.

The stock’s technical metrics paint an increasingly bearish picture, with DOW trading at a trailing P/E ratio of 75.92 and a forward P/E of 121.95, suggesting investors are paying premium valuations despite deteriorating fundamentals. The company’s 52-week range of $25.06 to $55.67 shows the stock is now trading near its annual lows, having lost nearly half its value over the past year with a one-year return of negative 45.77%. These metrics contrast sharply with the S&P 500’s one-year return of positive 17.23%, highlighting DOW’s significant underperformance relative to broader market indices.

Analyst sentiment remains cautious, with price targets ranging from a low of $22.00 to a high of $56.00 and an average target of $34.18, suggesting potential upside of approximately 27% from current levels. However, the company’s current financial performance, including a profit margin of just 0.69% and negative levered free cash flow, indicates significant operational challenges that may persist into the third quarter, with management forecasting Q3 net sales of approximately $10.2 billion versus consensus estimates of $10.599 billion.

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